Claiming more money through insurance than people are entitled to is considered fraud. Vehicular fraud consists of someone either staging an accident or a real accident with false statements or claims that costs are higher than they are.
No single driver wants to pay anymore than they have to for auto insurance premiums. When insurance companies boost their rates for each individual driver, it is partly due to having to pay for these acts of fraud.
An example of auto insurance fraud is that in a staged car accident, an insurance policy is taken out that will cover any damage from the accident. The driver creates the accident to obtain more money than he/she deserves. This would be considered “Hard” fraud. The insured deliberately plans to make the claim from an accident that was also intentional.
If an accident was truly unintentional, the insured driver may still claim that the value of their car was worth more than its actual value. Another common act of fraud is the faking of an injury for money. These unplanned acts, or opportunities are known as “Soft” fraud. This means that the policyholder had exaggerated a legitimate claim.
Whether these types of fraud have been reported or not, the insurance company has every right to refuse the claim. The insurance company can declare the claim as a nonsensical cause or “Bad Faith”. Due to the number of claims that are submitted daily to insurance companies, it becomes very expensive to look into every claim. Insurance companies are also vulnerable to fraud because false statements or claims may seem ordinary.
Insurance fraud doesn’t stop with automotives. There are many different types of insurance fraud that occur for each and every insurance policy that exists. Some of the other types of insurance fraud can be found in the health care industry, life insurance, property insurance and business insurance industries.
Every year, billions of consumer dollars are lost to fraud. If fraud exists, it should be reported to help save consumers and insurance companies money. To report detected acts of fraud casually and quietly, make sure you have all your bases covered. Check with a local law office or school to determine whether or not suspected activity is considered fraudulent. Also contact your insurance company if there are accident victims involved. All details and information should be recorded on paper, video or photo.
If you need to report fraudulent activity, call the National Insurance Crime Bureau (NICB) at 1-800-835-6422. The NICB is controlled by the insurance industry to investigate different insurance crimes.
